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Topic: BRK/JPM/AMZN healthcare tie up (Read 4544 times)

Interesting to note that Mr. Buffett and Mr. Munger have been unusually vocal concerning the financing aspect of healthcare and seem to back a single-payer system.

But the internal focus will initially be on the health benefit cost per employee aspect in a way perhaps that is related to how 3G capital would look at every step along the way to cut cost. The bottom line would include the value that the employee would perceive as the end result in terms of health benefits. Friction expected along the way but a potential win-win.

And then, the model could be expanded, whoever pays the bill at the end of the line.

The demographic of this 2MM people and their health profile is probably very desirable too. What works within this small group may not work for the population at large. Will they be covering retirees? How do they draw the line of who qualifies, and what is covered, and how are they covered, etc., etc. There's no doubt this will be great for these three companies. How does it impact the overall healthcare system in the US? We'll find out.

"How does it impact the overall healthcare system in the US? We'll find out." We will indeed.

The intent is long term but the short term focus will be on the cost/quality curve for their own employees. Private firms have had the option of outsourcing the health care benefit management. The decision is becoming more costly and it appears more and more to be a poor value proposition.

The "premium" is the total cost and you can adjust the graph for single/family status and can "compare" with employee contribution which is a fraction of total cost.Interesting to note that the total cost, even if the trend has somewhat improved comparing to the 1980's-90's period, continues to grow at relatively high rates.Also interesting to remember that rising health costs have been only one of the few items keeping CPI above zero in our (still) largely disinflationary world.

The "big three" announcement has been met with some doubts: "The new company will have to align itself with main industry players". Helpful to remember that many previous attempts have failed but, lately, many similar endeavors are coming to life. Intel has made some regional progress on this front. Also, in 2016, many self-insured employers (including American Express, BNSF, Coca-Cola, Verizon...) have formed the Health Transformation Alliance. The essence of these initiatives, at this point, is to "cooperate" and gain scale/leverage. So far, these groups show some promise but have not been able (so far) to address the fundamental cost drivers of unnecessary care and avoidable complications.

In a way, health care is a puzzle of components that are essentially commoditized. The way the incentives are set up, at this point, prevents competition and the associated downward pressure on prices as ill-defined collusion forces make prices "sticky". Also, over the years the third-party "shield" (on a net basis, obviously not the case if you have to deal with higher deductibles and higher co-payments) has become larger, delaying the impetus for significant reform as many participants tend to think that there is a free lunch somehow. The new "project" spearheaded by Amazon likely will target the whole supply chain.

Some analysts have mentioned that the fear of healthcare disruption will have to be reconciled with today's reality. The treatment of a tapeworm infection rests on the necessity to evacuate it. But first, you have to put it to sleep.

"Amazon seems like a nice elephant."I'm not sure what you mean? Are you referring to the elephant acquisitions that Mr. Buffett talks about?

If that's the case, maybe there is something to learn.

My understanding is that Mr. Buffett always carries his loaded elephant gun but is known to have said that he enjoyed shooting fish in a barrel.He does not seem to use an enterprise value to revenue ratio as a selection criteria.

In many ways, what Amazon has accomplished in the last 20 years is nothing short of extraordinary. I submit though that it is priced now for more of the same.

"Amazon seems like a nice elephant."I'm not sure what you mean? Are you referring to the elephant acquisitions that Mr. Buffett talks about?

If that's the case, maybe there is something to learn.

My understanding is that Mr. Buffett always carries his loaded elephant gun but is known to have said that he enjoyed shooting fish in a barrel.He does not seem to use an enterprise value to revenue ratio as a selection criteria.

In many ways, what Amazon has accomplished in the last 20 years is nothing short of extraordinary. I submit though that it is priced now for more of the same.

Funny because there may be some interesting parallels between Jeff Bezos and Ray Kroc.

Yes, and I meant it half jokingly.

I was imagining WEB & JB sitting down in Gorat's, with Bezos pitching him the healthcare idea, and Buffett saying "you know what, you'd have a lot more time to crush this idea, if you didn't have to do SEC filings & analyst calls."

The joking half was, of course, due to the the seemingly crazy valuation, and the huge leverage they'd probably have to take on to swallow Amazon.

Everyone here knows that I'm not a balance sheet ninja, and instead, am a story guy (this will undoubtedly bite me some day.)

I just love the concept of how BRK has freed up so many execs to run their businesses & re-allocate divs to capex (I know, no divs to re-allocate at Amazon, just having fun riffing on an idea here.)

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I don't know much about Kroc, other than what was included in the movie "the Founder."I'd guess that innovative processes and a relentless drive would be the main things the two men share in common.

"Amazon seems like a nice elephant."I'm not sure what you mean? Are you referring to the elephant acquisitions that Mr. Buffett talks about?

If that's the case, maybe there is something to learn.

My understanding is that Mr. Buffett always carries his loaded elephant gun but is known to have said that he enjoyed shooting fish in a barrel.He does not seem to use an enterprise value to revenue ratio as a selection criteria.

In many ways, what Amazon has accomplished in the last 20 years is nothing short of extraordinary. I submit though that it is priced now for more of the same.

Funny because there may be some interesting parallels between Jeff Bezos and Ray Kroc.

Yes, and I meant it half jokingly.

I was imagining WEB & JB sitting down in Gorat's, with Bezos pitching him the healthcare idea, and Buffett saying "you know what, you'd have a lot more time to crush this idea, if you didn't have to do SEC filings & analyst calls."

The joking half was, of course, due to the the seemingly crazy valuation, and the huge leverage they'd probably have to take on to swallow Amazon.

Everyone here knows that I'm not a balance sheet ninja, and instead, am a story guy (this will undoubtedly bite me some day.)

I just love the concept of how BRK has freed up so many execs to run their businesses & re-allocate divs to capex (I know, no divs to re-allocate at Amazon, just having fun riffing on an idea here.)

---

I don't know much about Kroc, other than what was included in the movie "the Founder."I'd guess that innovative processes and a relentless drive would be the main things the two men share in common.

Invert. With Amazon growing so fast it will soon be able to swallow BRK. WEB can retire and with Bezos at the helm all of Berkshire's cash can be used to grow Amazon instead of being allocated to buying companies.

"Amazon seems like a nice elephant."I'm not sure what you mean? Are you referring to the elephant acquisitions that Mr. Buffett talks about?

If that's the case, maybe there is something to learn.

My understanding is that Mr. Buffett always carries his loaded elephant gun but is known to have said that he enjoyed shooting fish in a barrel.He does not seem to use an enterprise value to revenue ratio as a selection criteria.

In many ways, what Amazon has accomplished in the last 20 years is nothing short of extraordinary. I submit though that it is priced now for more of the same.

Funny because there may be some interesting parallels between Jeff Bezos and Ray Kroc.

Yes, and I meant it half jokingly.

I was imagining WEB & JB sitting down in Gorat's, with Bezos pitching him the healthcare idea, and Buffett saying "you know what, you'd have a lot more time to crush this idea, if you didn't have to do SEC filings & analyst calls."

The joking half was, of course, due to the the seemingly crazy valuation, and the huge leverage they'd probably have to take on to swallow Amazon.

Everyone here knows that I'm not a balance sheet ninja, and instead, am a story guy (this will undoubtedly bite me some day.)

I just love the concept of how BRK has freed up so many execs to run their businesses & re-allocate divs to capex (I know, no divs to re-allocate at Amazon, just having fun riffing on an idea here.)

---

I don't know much about Kroc, other than what was included in the movie "the Founder."I'd guess that innovative processes and a relentless drive would be the main things the two men share in common.

Invert. With Amazon growing so fast it will soon be able to swallow BRK. WEB can retire and with Bezos at the helm all of Berkshire's cash can be used to grow Amazon instead of being allocated to buying companies.

... I don't know much about Kroc, other than what was included in the movie "the Founder."I'd guess that innovative processes and a relentless drive would be the main things the two men share in common. ...

To me, a pretty accurate - and short - description from you about what these two men have in common, DooDiligence.

Thank you to villainx and Cigarbutt for bringing this up about Mr. Buffett's thoughts about compensation for the next Berkshire CEO. That has skipped my attention.

Cigarbutt, somehow, I like the concept of shooting fish in a barrel with an elephant gun!

« Last Edit: February 02, 2018, 06:53:30 AM by John Hjorth »

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